European stocks rebound as German gloom fuels ECB hopes

Oct 07 2019

Some investors say German economic weakness may have a silver lining

London (AFP) - Europe’s stock markets rebounded Monday as investors bet that gloomy German economic data would help persuade the European Central Bank to continue its “accommodative” monetary policy, dealers said.

Frankfurt advanced 0.5 percent, while London and Paris each won 0.4 percent in early afternoon deals, despite news that German industrial orders in Germany fell back in August.

“Any weakness in the economic number, which we experienced today, confirms that the European Central Bank is going to remain accommodative and this helps investors to favour riskier assets” like stocks.

Most markets also rose in Asia after a mixed US jobs report eased worries about a recession in the world’s top economy – and maintained expectations the Federal Reserve will press on with more interest rate cuts.

However, there was some nervousness after reports said China had cut back on the number of areas it is willing to discuss at this week’s top-level trade talks with the US, rekindling concerns about the chances of any agreement between the two.

After a string of below-par data last week that highlighted the impact of Donald Trump’s trade war on the key manufacturing and services sectors, Friday’s much-anticipated non-farm payrolls figures showed unemployment at a 50-year low in September.

But the pace of job creation was the slowest in four months, wages fell and the manufacturing workforce also shrank for the second time this year.

All three main US indices rallied more than one percent as dealers breathed a sigh of relief that the jobs figures did not miss by a bigger margin.

- China’s ‘calculation’ -

Focus turns this week to the resumption of high-level trade talks between China and the United States in Washington.

Chinese Vice Premier Liu He is due to lead a delegation to Washington to resume trade talks this week

However, while there has been a broad expectation the two sides are coming together in some areas owing to their economies stuttering, reports said Beijing was looking to narrow the remit of any deal.

Bloomberg News reported that top negotiator Vice Premier Liu He said he would not put on the table reforms to Chinese industrial policy or government subsidies, a key source of anger within the White House.